Everyone Becomes a Threat

Thursday, October 25th, 2012

Free entry is not always good, and monopoly is not always bad, Hans-Hermann Hoppe argues:

Free entry and competition in the production of goods is good, but free competition in the production of bads is not. Free entry into the business of torturing and killing innocents, or free competition in counterfeiting or swindling, for instance, is not good; it is worse than bad.


Since man is as man is, in every society people who covet others’ property exist. Some people are more afflicted by this sentiment than others, but individuals usually learn not to act on such feelings or even feel ashamed for entertaining them. Generally only a few individuals are unable to successfully suppress their desire for others’ property, and they are treated as criminals by their fellow men and repressed by the threat of physical punishment. Under princely government, only one single person — the prince — can legally act on the desire for another man’s property, and it is this which makes him a potential danger and a “bad.”

However, a prince is restricted in his redistributive desires because all members of society have learned to regard the taking and redistributing of another man’s property as shameful and immoral. Accordingly, they watch a prince’s every action with utmost suspicion. In distinct contrast, by opening entry into government, anyone is permitted to freely express his desire for others’ property. What formerly was regarded as immoral and accordingly was suppressed is now considered a legitimate sentiment. Everyone may openly covet everyone else’s property in the name of democracy; and everyone may act on this desire for another’s property, provided that he finds entrance into government. Hence, under democracy everyone becomes a threat.

Consequently, under democratic conditions the popular though immoral and anti-social desire for another man’s property is systematically strengthened. Every demand is legitimate if it is proclaimed publicly under the special protection of “freedom of speech.” Everything can be said and claimed, and everything is up for grabs. Not even the seemingly most secure private property right is exempt from redistributive demands. Worse, subject to mass elections, those members of society with little or no inhibitions against taking another man’s property, that is, habitual a-moralists who are most talented in assembling majorities from a multitude of morally uninhibited and mutually incompatible popular demands (efficient demagogues) will tend to gain entrance in and rise to the top of government. Hence, a bad situation becomes even worse.

Historically, the selection of a prince was through the accident of his noble birth, and his only personal qualification was typically his upbringing as a future prince and preserver of the dynasty, its status, and its possessions. This did not assure that a prince would not be bad and dangerous, of course. However, it is worth remembering that any prince who failed in his primary duty of preserving the dynasty — who ruined the country, caused civil unrest, turmoil and strife, or otherwise endangered the position of the dynasty — faced the immediate risk either of being neutralized or assassinated by another member of his own family. In any case, however, even if the accident of birth and his upbringing did not preclude that a prince might be bad and dangerous, at the same time the accident of a noble birth and a princely education also did not preclude that he might be a harmless dilettante or even a good and moral person.

In contrast, the selection of government rulers by means of popular elections makes it nearly impossible that a good or harmless person could ever rise to the top. Prime ministers and presidents are selected for their proven efficiency as morally uninhibited demagogues. Thus, democracy virtually assures that only bad and dangerous men will ever rise to the top of government. Indeed, as a result of free political competition and selection, those who rise will become increasingly bad and dangerous individuals, yet as temporary and interchangeable caretakers they will only rarely be assassinated.


  1. James James says:

    “However, a prince is restricted in his redistributive desires”

    Oh balls.

    Hoppe is great at looking at things from a different perspective, and his “free competition in the production of bads is not [good]” and his “the selection of government rulers by means of popular elections makes it nearly impossible that a good or harmless person could ever rise to the top. Prime ministers and presidents are selected for their proven efficiency as morally uninhibited demagogues” are just as good as his argument that monarchs work for the long-term good of their countries but democracies don’t.

    But if he thinks that a secure monarch won’t tax at the Laffer maximum because “all members of society… watch a prince’s every action with utmost suspicion”, he is dreaming.

  2. Isegoria says:

    I share your doubts, James, but historically monarchs have not taxed their subjects at anywhere near the rates of democracies and modern totalitarian regimes.

  3. James James says:

    That is a very good point. From an interview of Edward Luttwak by David Smick:

    This differs, of course, from country to country. Spain and Italy have very similar legal systems but while tax evasion is rampant in both countries, corruption in Spain has been a marginal phenomenon, and the Spanish governing elite is not especially privileged. Even the Spanish king lives relatively modestly. The Italian presidency, by contrast, costs much more than the British monarchy. Buckingham Palace is an outhouse compared to the Quirinale, and Balmoral a mere cottage as compared to the summer residence of Castel Porziano, both full of highly paid staff, in line with Italy’s uniquely high political salaries.

    For example, the president of the province of Bolzano (160,000 inhabitants) is paid 25,000 [euro] a month, some 40 percent more than Chancellor Merkel, and a tad less than President Obama. He has lots of colleagues in Italy’s nine thousand-odd local authorities: the 300,000 inhabitants of the region of Molise are served by a full-fledged regional government, a regional council, two provincial governments with their own councils, and 105 municipalities. Their governor, various presidents, and 105 mayors are paid from 3,000 [euro] to 20,000 [euro] per month.

    Italy’s central government also pays top officials very high salaries: the director-general of the Treasury receives some 500,000 [euro] a year, with many judges receiving more than 250,000 [euro]. That reflects the indirect effect of a law that links the salaries of deputies and senators to the salary of senior judges: by ensuring that top judges are paid far more than the EU average, Italy’s 945 parliamentarians (Germany has 691) themselves outdo all their European colleagues with salaries of roughly 150,000 [euro], in addition to lots of fringe benefits, including free travel.

    But the privileges of Italy’s ruling elite really come out in their exceptionally generous pensions. Mario Draghi, who made many speeches calling for reductions in ordinary worker pensions (rarely more than 1,400 [euro] a month), continued to collect his own 14,843 [euro] a month from his former Treasury job, while also being paid 450,000 [euro] a year as head of Italy’s central bank (he has taken a huge cut at the European Central Bank, though he will still do much better than Bernanke). Because there is no limit on the concurrency of parliamentary salaries with state and Bank of Italy pensions, former President Carlo Azeglio Ciampi collects a combined 53,000 [euro] a month, with a slew of former ministers and prime ministers including Amato (31,000 [euro]), Dini (44,000 [euro]), and Andreotti (29,000 [euro]) all receiving more than the salary of U.S. presidents or German chancellors.

    A second unique feature of the Italian state pension system is that while most pensions are very low, there are no upper limits at all. Hence the pensions of former state-owned company managers often exceed 240,000 [euro] a year, with quite a few collecting more than 400,000 [euro], including the lucky recipient of what must be the world’s highest state pension, at 1,173,205 [euro].

    Finally, the Italian state pension system also differs from Social Security and most of its European counterparts in having no minimum age limits. Draghi himself has collected his own ample “baby pensione” from age 53, but the ex-teacher wife of the head of the Northern League started receiving her modest 766 [euro] a month from age 38, while a great number of former politicians started on their much higher pensions of 100,000-200,000 [euro] a year well before reaching 50. Some were parliamentarians who resigned very soon after being appointed, with a certain Luca Boneschi being the record-holder: he served only one day (May 12, 1982) before resigning, but from next year at age 44 he started receiving 3,108 [euro] a month. Two other recipients of parliamentary pensions served only eight days, and hundreds for only one term.

    Certainly, a Wiedervereinigung with German norms would mean a drastic loss of income for Italy’s political elite. Yet many of them are willing to accept that, some because of patriotism, others because they are confident in their ability to circumvent salary and pension cuts–politics is a highly profitable business in Italy in other ways as well.

    The same goes for the cost of the French Presidency compared to the British Monarchy.

  4. James James says:

    So perhaps there is something to Hoppe’s claim that “a prince is restricted in his redistributive desires because all members of society have learned to regard the taking and redistributing of another man’s property as shameful and immoral. Accordingly, they watch a prince’s every action with utmost suspicion.”

    Since any monarch would struggle to actually consume more than £1bn worth of stuff per year, the people would get pissed off if a monarch tried to tax £500bn/year and invest it. The monarch would soon own all capital in the country and the people would revolt. Since high taxes increase unrest and thus increase security costs, much better to tax only £1bn/year on top of security costs.

    Here’s another argument:

    Any monarch would struggle to actually consume £1bn worth of stuff per year, so have little incentive to tax more than that. What are they going to do with any more tax revenue? Invest it? If you’re a monarch, why bother? Much better to rely on the ingenuity of your subjects to do so, since you can tax the revenue later.

  5. James James says:

    “Historically monarchs have not taxed their subjects at anywhere near the rates of democracies and modern totalitarian regimes.”

    Actually, thinking about this further, I’m not sure it’s true. Income tax is a Ricardian rent, and the sum of all Ricardian rents is fixed in the short run. I.e. if the state abolished income tax and switched to LVT, it could collect pretty much the same amount of revenue. If the state just abolished income tax, property rents would go up and the revenue would just be collected by landowners. And if the state had LVT instead of income tax, but refused to collect as much as it could, the balance would just be collected by landowners instead.

    So what I’d want to see is not a graph showing state spending as a percentage of GDP to have rocketed over the last century or two. Why I want to see is a graph of state-spending + land rents over the last century or two. My guess is it would be fairly flat.

  6. James James says:

    So I think there may be something to Hoppe’s theory (as a monarch, don’t bother making more profit than you can spend because you’ll just piss people off), but this relies on people not realising that anything the monarch doesn’t tax them, they’ll just pay to other rentiers instead.

    And my theory that a monarch shouldn’t tax more than they can spend because they won’t be able to invest it all as well as their subjects may be true so far as it goes, but it’s a mistake to think that the untaxed remainder will all be invested. The remainder will all go to rentiers, so a greater proportion of it would be consumed than if there were no rentiers other than the monarch.

    Certainly my theory implies that, as long as they can still invest effectively, it is a good idea to have as few rentiers as possible, i.e. all rents ultimately going to a few natural persons rather than lots of them. Because that means a smaller proportion of the rent gets consumed and more of it invested.

    This implies that monarchy is better than neocameralism, where there might be many thousands of shareholders who all need to be fed.

  7. Isegoria says:

    My understanding is that historical monarchs have had very specific rights to collect very specific taxes. Introducing a new tax could trigger a revolt. Democracies, on the other hand, have the Will of the People behind them. We can tax ourselves without much resistance.

  8. James James says:

    Sure, but I don’t particularly regard this as an advantage. Land rents will always be collected: if the monarch doesn’t tax, then the people just pay more rent to their local lord. The harm that democracy does is that the owners (civil servants) have to pretend to work while they collect their rents. It would be much better if the people didn’t expect them to do government “jobs”; then civil servants would be free to do something productive in addition to collecting rents.

  9. Juraj says:

    Hoppe’s arguments are made with ceteris paribus in mind. He would not claim that all monarchs tax less than a democratic State nor that a society with a smaller State is preferable to another with a bigger State per se.

    There is no problem with collecting land rents as long as the land was homesteaded or acquired through exchange. Sadly, that’s not the case in many instances.

  10. James James says:

    “There is no problem with collecting land rents as long as the land was homesteaded or acquired through exchange.”

    Typical libertarian woo. Is there any property owner in the world who can trace his title back to when it was originally homesteaded? No.

    As Rothbard says in “Justice and Property Rights”, as long as the rightful heirs of some property cannot be identified, as is the case in all cases, any property title is fine.

    He doesn’t notice that this applies to states, hence his hilarious summary of Spencer Heath:

    “The Heathian goal is to have… large land areas owned by single private corporations, which would own and rent out the land and housing over the area, and provide all conceivable “public services”: police, fire, roads, courts, etc., out of the voluntarily-paid rent… the rent would be collected, and the land owned, by private corporate landlords rather than by the government, and the payment therefore voluntary rather than coercive.”

    So just call the government a “private corporation” which it is, and everything is fine!

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